Half-year report
22/12/2023 13:51
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FORESIGHT TECHNOLOGY VCT PLC
LEI: 21380013CXOR8N6OD977
Financial Highlights
FWT Shares Fund
* Net Asset Value per FWT Share at 30 September 2023 was 101.0p (31 March
2023: 102.8p).
* During the period, under the Offer for subscription for the Foresight WAE
Technology Shares fund (the “FWT Shares fund”), dated 5 January 2022,
£2.8m of new funds were raised.
* During the period, the fund executed four follow-on investments into Machine
Discovery Limited, Previsico Limited, Additive Manufacturing Technologies
Limited and Insphere Limited.
* Since the end of the reporting period, a further £3.0m has been raised,
bringing the total funds raised to £28.7m.
* Since the end of the reporting period, one new and three follow-on
investments have been made, bringing total deployment to £19.9m.
Chairman’s Statement
On behalf of the Board, I am pleased to present the Unaudited Half-Yearly
Financial Report for Foresight Technology VCT Plc for the six months ended 30
September 2023 and to provide you with an update on the developments affecting
the Company.
COMPANY
The Foresight WAE Technology VCT share class (the “FWT Shares”) was
launched in December 2019, and represents an exciting investment opportunity
made possible by the collaboration between Foresight Group and WAE
Technologies Limited (“WAE”), a technology and engineering services
business, originally spun out of the Williams Formula 1 business.
The share class provides investors with the opportunity to invest in a
portfolio of early-stage companies with high growth-potential, developing
innovative and occasionally transformational technologies across a range of
different sectors. It builds on the successful relationship that Foresight and
WAE have enjoyed from their launch of the Foresight WAE Technology EIS Fund
(the ‘EIS fund’) in November 2016, which has raised over £60 million to
date and has made over thirty investments across a range of different sectors
so far.
Fundraising and share issues
The Offers for subscription, dated 11 January 2023 and relaunched on 6
September 2023, are each up to £15 million (with an overallotment facility
for up to an additional £10 million) through the issue of FWT Shares. During
the six months ended 30 September 2023, across both Offers, 2.7 million FWT
Shares were allotted, raising a further £2.8m, bringing the total funds
raised to over £25m.
Post period end, a further 2.9 million FWT Shares were allotted, increasing
the total funds raised to £28.7m.
Portfolio and Deal Activity
A detailed analysis of the investment portfolio performance over the period is
given in the Investment Manager’s Review.
During the period under review the Investment Manager completed four follow-on
investments in exciting companies costing a total of £1.0m. The follow-on
investments that were completed in the period were into Machine Discovery
Limited, Previsico Limited, Additive Manufacturing Technologies Limited and
Insphere Limited.
Details of each of the top 10 portfolio companies by value as at 30 September
2023 can be found in the Investment Manager’s review.
As at 30 September 2023, the FWT shares had made investments totalling £17.9m
in 27 exciting portfolio companies. An additional two investments were
acquired as part of the merger with the Ordinary share class, bringing the
total number of investments for the FWT Share class to 29. Post period end,
the FWT Shares made one new and three follow-on investments totalling £2.0m.
The Investment Manager continues to see a strong pipeline of potential
investments sourced through its regional networks and well developed
relationships with advisers and the SME community; however, it is also focused
on supporting the existing portfolio through the current economic environment.
Following the fundraising over the last couple of years as well as the
fundraising for the ongoing September 2023 offer, the Company is in a position
to fully support the portfolio, where appropriate, and exploit potential
attractive investment opportunities.
Management fees
The annual management fee of the FWT Shares fund is calculated as 2.0% of Net
Assets and equated to £248,000 during the period. The Board believe that the
annual management fee represents good value for investors.
Responsible Investing
The analysis of environmental, social and governance (“ESG”) issues is
embedded in the Manager’s investment process and these factors are
considered key in determining the quality of a business and its long-term
success. Central to the Manager’s responsible investment approach are five
ESG principles that are applied to evaluate investee companies, acquired since
May 2018, throughout the lifecycle of their investment, from their initial
review and acquisition to their final sale. Every year, these portfolio
companies are assessed and progress measured against these principles.
Share Class Merger
As explained in last year’s Annual Report, on 5 July 2023, shareholders of
the Company approved the resolution to redesignate the residual £0.6m of
Ordinary Share capital (following a further dividend of 5.5p per share to
Ordinary Shareholders which was paid on 25 July 2023) to FWT Shares, and cease
the existence of the Ordinary Shares. The Ordinary shares were suspended from
the London Stock Exchange on 28 June 2023 and subsequently, on 4 September
2023, the Company’s name was changed to Foresight Technology VCT Plc.
On the 20 September 2023 the Board announced a variation to the buyback policy
for the former Ordinary Shareholders which would allow the Shareholders to
benefit from a buyback at a nil discount to NAV in respect of FWT Shares which
they hold pursuant to the above-mentioned redesignation. This Buyback offer
will remain open until 20 September 2024.
Sunset Clause
As explained in last year’s Annual Report, a “sunset clause” applies to
the current approved scheme for EIS and VCT tax reliefs. In the Annual Report
we discussed how this clause provides that income tax relief will expire on
subscriptions made for VCT shares on or after 6 April 2025, unless the
legislation is amended to make the scheme permanent, or the “sunset
clause” is extended.
The UK Chancellor has confirmed in the autumn statement that the government
remains committed to ensuring early-stage, innovative companies have access to
the investment they need to grow and develop. As a result it was announced on
22 November 2023 that the government will legislate to extend the Enterprise
Investment Scheme (‘EIS’) and Venture Capital Trusts (‘VCT’) to 2035 -
this is dependent on approval for the extension from the EU due to Northern
Ireland’s unique access to the EU Single Market.
Outlook
While the impact of the pandemic has lessened, other economic impacts continue
to dampen consumer and business confidence. Ongoing inflationary pressures,
tight monetary policies, supply chain issues and a lack of bank lending
appetite may continue to hinder economic recovery. The Board is conscious that
such conditions could prove particularly challenging for our investee
companies which are unquoted, small, early-growth businesses and by their
nature entail higher levels of risk and lower liquidity than larger listed
companies.
On the other hand, these younger companies may prove more agile and creative
in their approach and better able to adapt their operations swiftly and
identify new products and services in response to changing circumstances.
The portfolio is showing signs of resilience and the Manager has been working
with management teams to assess business plans, consider funding requirements
and help navigate through these difficult times.
The Manager is continuing to see a promising pipeline of potential
investments, both new and follow-on. In addition to the funds raised earlier
in the year, we have already launched a new offer on 6 September 2023 to raise
further funds over the coming months. These combined funds will provide the
necessary resources to make selective acquisitions from the increasing numbers
of investment opportunities that are now emerging out of the recent
disruption. Although in the short term there may be considerable economic
headwinds, we believe the Company’s diversified portfolio is well positioned
to generate long-term value for Shareholders.
Ernie Richardson
Chairman
22 December 2023
FWT Shares
Investment Manager’s Review
Summary
Between its launch on 20 December 2019 and the end of the reporting period,
the FWT Shares fund has raised £25.7m. The Offer provides investors with the
opportunity to invest in a portfolio of early-stage companies with high
growth-potential, developing innovative and occasionally transformational
technologies across a range of different sectors. As at 30 September 2023, the
fund had made investments into 29 companies totalling £17.9m. This included
four follow-on investments in the six month period to 30 September 2023
totalling £1.0m. These investments are summarised below:
Additive Manufacturing Technologies (AMT): a manufacturer of systems that
automate the postprocessing of 3D printed parts e.g. unpacking, surface
smoothing, sealing and colouring.
Insphere: a developer of novel metrology technologies that will measure the
accuracy of automated manufacturing processes in real-time.
Machine Discovery: a University of Oxford spin-out developing machine learning
technology that simplifies, automates and accelerates highly complex computer
simulations.
Previsico: a University of Loughborough spin-out providing a market-leading
flood forecasting and warning software platform.
Fundraising
The Offer, made possible through an innovative collaboration between Foresight
Group and WAE Technologies Ltd, continues to build positive momentum in the
market, for the six months ending 30 September 2023, a further £3.4m has been
raised, bringing the total raised to £5.0m in the most recent fund-raising
round and £25.7m overall (with the above figures inclusive of the £0.6m that
converted from Ordinary Shares to FWT Shares).
Pipeline
The investment manager continues to see a strong pipeline of opportunities
comprising of new and portfolio follow-ons. At the time of writing, two deals
were nearing completion and a number of other deals were having terms
negotiated.
Foresight Group LLP
Investment Manager
22 December 2023
Unaudited Half-Yearly Results and Responsibilities Statements
Principal Risks and Uncertainties
The principal risks faced by the Company are as follows:
* Performance;
* Regulatory;
* Operational; and
* Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 March 2023. A
detailed explanation can be found on pages 26 and 27 of the Annual Report and
Accounts which is available on Foresight Group’s website
www.foresightgroup.eu or by writing to Foresight Group at:
The Shard,
32 London Bridge Street,
London,
SE1 9SG.
In the view of the Board, there have been no changes to the fundamental nature
of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Directors' Responsibility Statement
The Disclosure and Transparency Rules (‘DTR’) of the Financial Conduct
Authority require the Directors to confirm their responsibilities in relation
to the preparation and publication of the Half-Yearly Financial Report and
financial statements.
The Directors confirm to the best of their knowledge that:
1. the summarised set of financial statements has been prepared in accordance
with FRS 104;
2. the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year);
3. the summarised set of financial statements gives a true and fair view of
the assets, liabilities, financial position and profit or loss of the Company
as required by DTR 4.2.4R; and
4. the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties’ transactions and
changes therein).
Going Concern
The Company’s business activities, together with the factors likely to
affect its future development, performance and position, are set out in the
Strategic Report of the Annual Report. The financial position of the Company,
its cash flows, liquidity position and borrowing facilities are described in
the Chair’s Statement, Strategic Report and Notes to the Accounts of the 31
March 2023 Annual Report.
In addition, the Annual Report includes the Company’s objectives, policies
and processes for managing its capital; its financial risk management
objectives; details of its financial instruments; and its exposures to credit
risk and liquidity risk.
The Company has considerable financial resources together with investments and
through the cash generated from fundraising activities. As a consequence, the
Directors believe that the Company is well placed to manage its business risks
successfully.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Thus they continue to adopt the going concern basis of accounting in preparing
the annual financial statements.
The Half-Yearly Financial Report has not been audited nor reviewed by the
auditors.
On behalf of the Board
Ernie Richardson
Chairman
22 December 2023
Unaudited Income Statement
for the six months ended 30 September 2023
Six months ended Six months ended Year ended
30 September 2023 30 September 2022 31 March 2023
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment holding (losses)/gains — (856) (856) — 9,848 9,848 — (12,096) (12,096)
Realised gains on investments — — — — — — — 27,917 27,917
Income 866 — 866 214 — 214 656 — 656
Investment management fees (62) (186) (248) (122) (367) (489) (263) (3,557) (3,820)
Other expenses (235) — (235) (252) — (252) (559) — (559)
Profit/(loss) before taxation 569 (1,042) (473) (160) 9,481 9,321 (166) 12,264 12,098
Taxation — — — — — — — — —
Profit/(loss) after taxation 569 ¹ (1,042) ² (473) ³ (160) 9,481 9,321 (166) 12,264 12,098
Profit/(loss) per share
Ordinary Share 2.3p (2.4)p 0.0p (0.1)p 24.0p 23.9p 0.2p 31.7p 31.9p
FWT Share (1.0)p (0.9)p (1.9)p (0.6)p 6.2p 5.6p (1.2)p 6.7p 5.5p
The total column of this statement is the profit and loss account of the
Company and the revenue and capital columns represent supplementary
information.
All revenue and capital items in the above Income Statement are derived from
continuing operations. No operations were acquired or discontinued in the
period.
The Company has no recognised gains or losses other than those shown above,
therefore no separate statement of total recognised gains and losses has been
presented.
¹£806k relates to the Ordinary Share class before the completion of the
merger on 5 July 2023.
²(£823k) relates to the Ordinary Share class before the completion of the
merger on 5 July 2023.
³(£17k) relates to the Ordinary Share class before the completion of the
merger on 5 July 2023.
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 September 2023
Called-up share capital Share premium account Capital redemption reserve Distributable reserve* Capital reserve* Revaluation reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2023 568 19,079 208 1,828 603 3,009 25,295
Share issues in the period 27 2,805 — — — — 2,832
Share class merger (341) 341 — — — — —
Expenses in relation to share issues — (70) — — — — (70)
Expenses in relation to prior year share issues — (3) — — — — (3)
Investment holding losses — — — — — (856) (856)
Dividends paid — — — (1,903) — — (1,903)
Management fees charged to capital — — — — (186) — (186)
Revenue profit for the period — — — 569 — — 569
As at 30 September 2023 254 22,152 208 494 417 2,153 25,678
* Total distributable reserves at 30 September 2023 were £911,000 (31 March
2023: £2,431,000).
Unaudited Balance Sheet at 30 September 2023
Registered Number: 07289280
As at 30 September 2023 (unaudited) As at 30 September 2022 (unaudited) As at 31 March 2023 (audited)
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 20,048 60,679 19,951
Current assets
Debtors 88 569 170
Cash and cash equivalents 5,848 3,592 5,437
5,936 4,161 5,607
Creditors
Amounts falling due within one year (306) (138) (263)
Net current assets 5,630 4,023 5,344
Net assets 25,678 64,702 25,295
Capital and reserves
Called-up share capital 254 534 568
Share premium 22,152 15,633 19,079
Capital redemption reserve 208 208 208
Distributable reserve 494 37,948 1,828
Capital reserve 417 (14,574) 603
Revaluation reserve 2,153 24,953 3,009
Equity shareholders' funds 25,678 64,702 25,295
Net asset value per share
Ordinary Share n/a 131.2p 7.2p
FWT Share 101.0p 102.9p 102.8p
Unaudited Cash Flow Statement
for the six months ended 30 September 2023
Six months ended 30 September 2023 (unaudited) £’000 Six months ended 30 September 2022 (unaudited) £’000 Year ended 31 March 2023 (audited) £’000
Cash flow from operating activities
Deposit and similar interest received 44 11 30
Investment management fees paid (261) (472) (1,030)
Performance incentive paid — — (2,767)
Secretarial fees paid (39) (87) (173)
Other cash payments (149) (192) (299)
Net cash outflow from operating activities (405) (740) (4,239)
Cash flow from investing activities
Purchase of investments (853) (4,874) (10,146)
Investments awaiting completion — — (100)
Net proceeds on sale of investments — 274 52,247
Investment income received 822 74 984
Net cash (outflow)/inflow from investing activities (31) (4,526) 42,985
Cash flow from financing activities
Proceeds of fund raising 2,816 1,697 5,239
Expenses of fund raising (66) (53) (98)
Equity dividends paid (1,903) — (45,664)
Net cash inflow/(outflow) from financing activities 847 1,644 (40,523)
Net inflow/(outflow) of cash in the period 411 (3,622) (1,777)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash for the period 411 (3,622) (1,777)
Net cash at start of period 5,437 7,214 7,214
Net cash at end of period 5,848 3,592 5,437
Analysis of changes in net debt At 1 April 2023 £’000 Cash Flow £’000 At 30 September 2023 £’000
Cash and cash equivalents 5,437 411 5,848
Notes to the Unaudited Half-Yearly Results
for the six months ended 30 September 2023
1. The Unaudited Half-Yearly Financial Report has been prepared on the
basis of the accounting policies set out in the statutory accounts of the
Company for the year ended 31 March 2023. Unquoted investments have been
valued in accordance with International Private Equity and Venture Capital
Valuation Guidelines.
2. These are not statutory accounts in accordance with S436 of the
Companies Act 2006 and the financial information for the six months ended 30
September 2023 and 30 September 2022 has been neither audited nor formally
reviewed. Statutory accounts in respect of the year ended 31 March 2023 have
been audited and reported on by the Company’s auditors and delivered to the
Registrar of Companies and included the report of the auditors which was
unqualified and did not contain a statement under S498(2) or S498(3) of the
Companies Act 2006. No statutory accounts in respect of any period after 31
March 2023 have been reported on by the Company’s auditors or delivered to
the Registrar of Companies.
3. Copies of the Unaudited Half-Yearly Financial Report for the six
months ended 30 September 2023 have been sent to shareholders via their chosen
method of communication and are available for inspection at the Registered
Office of the Company at The Shard, 32 London Bridge Street, London, SE1 9SG.
Copies are also available electronically at www.foresightgroup.eu.
4 Net asset value per share
The Net Asset Value per share is based on net assets at the end of the period
and on the number of shares in issue at that date.
Ordinary Shares FWT Shares
Net assets £’000 Number of Shares in issue Net assets £’000 Number of Shares in issue
30 September 2023 — — 25,678 25,419,835
30 September 2022 45,378 34,593,623 19,324 18,776,656
31 March 2023 2,477 34,593,623 22,818 22,200,316
5 Return per share
The weighted average number of shares used to calculate the respective returns
are shown in the table below:
Number of Shares
Ordinary Shares FWT Shares
30 September 2023¹ 34,593,623 24,608,698
30 September 2022 34,593,623 18,596,307
31 March 2023 34,593,623 19,466,327
Earnings for the period should not be taken as a guide to the results for the
full year.
¹The number of shares used to calculate the returns for the Ordinary Share
class in the period is the weighted average from the period start date to the
date of the merger, 5 July 2023.
6 Income
Six months ended 30 September 2023 (unaudited) £’000 Six months ended 30 September 2022 (unaudited) £’000 Year ended 31 March 2023 (audited) £’000
Dividends received 822 — 264
Bank interest 44 11 30
Loan stock interest — 203 362
Total Income 866 214 656
7 Investments held at fair value through profit or loss
Company £’000
Book cost at 1 April 2023 16,942
Investment holding gains at 1 April 2023 3,009
Valuation at 1 April 2023 19,951
Movements in the period:
Purchases at cost 953
Disposal proceeds —
Realised gains —
Investment holding losses (856)
Valuation at 30 September 2023 20,048
Book cost at 30 September 2023 17,895
Investment holding gains at 30 September 2023 2,153
Valuation at 30 September 2023 20,048
8 Transactions with the manager
Details of arrangements with Foresight Group LLP are given in the Annual
Report and Accounts for year ended 31 March 2023, in the Directors’ Report
and Notes 3 and 13. All arrangements and transactions were on an arms length
basis.
Foresight Group LLP, which was appointed as Investment Manager on 27 January
2020, earned fees of £248,000 in the six months ended 30 September 2023 (six
months ended 30 September 2022: £489,000; year ended 31 March 2023:
£3,820,000 including a performance incentive fee of £2,767,000).
Foresight Group LLP is the Company Secretary (appointed in November 2017) and
received, directly and indirectly, for accounting and company secretarial
services fees of £39,000 in the six months ended 30 September 2023 (six
months ended 30 September 2022: £87,000; year ended 31 March 2023:
£173,000).
At the balance sheet date there was £22,000 due from (30 September 2022:
£38,000 due to; 31 March 2023: £35,000 due from) Foresight Group LLP. No
amounts have been written off in the period in respect of debts due to or from
related parties.
9 Related party transactions
No Director has an interest in any contract to which the Company is a party
other than their appointment and payment as Directors.
10 Post balance sheet event
Between the year end and the date of this report, under the offer for
subscription to raise up to £15m FWT shares (with an overallotment facility
to raise up to a further £10m), the Company issued a total of 2,894,110
shares which raised funds of £3.0m.
Between the 30 September 2023 and the date of this report, the FWT shares
invested a total of £2.0m across four investee companies.
END